3D headphone startup closes up shop after crowdfunding $3.2 million

Tens of thousands of orders will never be fulfilled.

Back in 2016, Ossic X hit the ground running with a crowdfunded effort to fund and sell a 3D headphone that produces true HRTF 3D-positional audio, which as we stated at the time is what VR needs. Unfortunately, the startup ran out of money to produce more units and is closing its doors, leaving tens of thousands of 'preorders' unfulfilled after shipping out a relatively small batch.

The fate of Ossic X serves as a cautionary tale for crowdfunding, which is commonly viewed as a preorder system. In fact, Ossic X labeled it as such on both its Kickstarter and Indiegogo pages, with a big blue preorder button the former and "preorder" listed in numerous spots on the latter.

There is a bit of confusion as to exactly how much Ossic X raised. The Kickstarter page lists more than $2.7 million in funds while Indiegogo displays a total exceeding $3.2 million. However, a representative from Indiegogo told TechCrunch that the $3.2 million figure on its site includes funds also raised by Kickstarter, whereas some earlier reports incorrectly listed the total at nearly $6 million in combined crowdfunding.

Still, $3.2 million is obviously a lot of money. On top of that, Ossic X says it raised a "substantial" seed investment outside of crowdfunding, and that "crowdfunding represented about half of total funding." Going by that claim, Ossic X collected around $6 million total to bring its 3D headphones to market. Yet somehow, the company ran out of funds, falling $2 million short of what it needed to "complete mass production of the remaining backlog."

"This was obviously not our desired outcome. The team worked exceptionally hard and created a production-ready product that is a technological and performance breakthrough. To fail at the 5 yard-line is a tragedy. We are extremely sorry that we cannot deliver your product and want you to know that the team has done everything possible including investing our own savings and working without salary to exhaust all possibilities," Ossic X said in a statement.

Ossic X says it did ship some initial units, though not very many—the company produced 250 finalized models, shipping 80 of them to Kickstarter backers who pledged $1,000 for the Innovator Edition tier. That leaves more than 23,000 preorders on Kickstarter and Indiegogo combined as unfulfilled.

Naturally, backers are pretty pissed.

"$319 down the drown, and I'm done with Kickerstarter," one of the backers commented.

In the aftermath of the announcement, burned backers have formed a Facebook group in support of opening a class-action lawsuit. The group is approaching 2,000 members as of this writing, though with Ossic X having run of money, there's probably not much to be gained in the long run.